A lag in Tether’s wallet blacklisting process allowed over $78 million in illicit funds to be moved before enforcement actions took effect, according to a new report from blockchain compliance company AMLBot.
Tether’s address blacklisting becomes effective only after a considerable delay from when the process is initiated on Ethereum and Tron, according the report published May 15.
“This delay originates from Tether’s multisignature contract setup on both Tron and Ethereum, transforming what should be an immediate compliance action into a window of opportunity for illicit actors,“ the report reads.
Tether’s blacklisting procedure is a multi-step process with a first transaction effectively warning of the upcoming blacklisting. First, a Tether administrator multisignature transaction submits a pending call to “addBlackList” on the USDT-TRC20 contract.
This results in a public “submission” of the target address as a blacklist candidate. This is followed by a second multisignature transaction confirming the submission,